Dev - Corporate Brand Help or Hindrance

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hbr.org | February 2008 | Harvard Business Review 49 HBR’s cases, which are fictional, present common managerial dilemmas and offer concrete solutions from experts. Daniel Vasconcellos HBR CASE STUDY A NDRE CLEARY ABSENTMINDEDLY fidgeted with the bottle of melatonin tablets in his left hand, lightly jiggling the pills with each twitch of his wrist. He had hoped to catch up on some much-needed sleep during the 20-hour flight to Rio de Janeiro – this being the final leg of a six- week series of meet and greets that had taken the CEO of Lilypad Hotels and Resorts across the continental United States, over to the Middle East, and now to South America. He sat comfortably in the first-class cabin of a 767, loafers under the seat, pillow poised to do its job. Still, Andre remained alert and completely in thrall to the soft blue glow of his laptop and, in particular, an open PowerPoint presentation. Abigail Ross, Lilypad’s executive vice president of sales and marketing, had outlined a potential new branding strategy for the San Francisco–based hotel man- agement company. The Corporate Brand: Help or Hindrance? Lilypad Hotels and Resorts may rebrand its boutique properties under the corporate name. Will customers and hotel managers buy in – or simply check out? by Chekitan S. Dev

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hbr.org | February 2008 | Harvard Business Review 49

HBR’s cases, which are fi ctional, present common managerial

dilemmas and offer concrete solutions from experts. Dan

iel V

asco

ncel

los

HBR CASE STUDY

ANDRE CLEARY ABSENTMINDEDLY fi dgeted with the bottle

of melatonin tablets in his left hand, lightly jiggling

the pills with each twitch of his wrist. He had hoped

to catch up on some much-needed sleep during the

20-hour fl ight to Rio de Janeiro – this being the fi nal leg of a six-

week series of meet and greets that had taken the CEO of Lilypad

Hotels and Resorts across the continental United States, over to

the Middle East, and now to South America. He sat comfortably

in the fi rst-class cabin of a 767, loafers under the seat, pillow

poised to do its job. Still, Andre remained alert and completely

in thrall to the soft blue glow of his laptop and, in particular, an

open PowerPoint presentation. Abigail Ross, Lilypad’s executive

vice president of sales and marketing, had outlined a potential

new branding strategy for the San Francisco–based hotel man-

agement company.

The Corporate Brand: Help or Hindrance?Lilypad Hotels and Resorts may rebrand its boutique properties under the corporate name. Will customers and hotel managers buy in – or simply check out?

by Chekitan S. Dev

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HBR CASE STUDY | The Corporate Brand: Help or Hindrance?

50 Harvard Business Review | February 2008 | hbr.org

On the face of it, Andre thought, the

20-year-old company’s existing brand

strategy was working just fi ne. Lilypad

managed 12 boutique hotels and re-

sorts worldwide – iconic properties that

were as much destination sites as the

locations they were in. All the hotels

under contract with Lilypad featured

architectural details, furnishings, and

culinary choices that refl ected local cul-

ture and tastes. Each came with its own

set of intangibles and its own sense of

place. The company’s fl agship hotel,

for instance, the Maritime, had started

out as an abandoned counting house

near San Francisco’s famed Fisherman’s

Wharf. Company founder and city na-

tive Betsey T. Hale took on the develop-

ment of the Maritime as a pet project,

throwing her own dollars behind re-

making the building into an eight-story

set of suites with tall windows, oversize

living spaces, and patios offering spec-

tacular city views. The decor incorpo-

rated the knotty-pine look and feel of

the old captains’ haunt. These weren’t

just nicely appointed rooms that had

fresh-cut fl owers and sheets with high

thread counts; they were designed to

feed the aspirations and desires of the

clientele. The company’s larger rivals

took a different approach to attract-

ing guests, one that Andre liked to call

“cookie-cutter luxe” – creating consis-

tent and predictable, but still upscale,

customer experiences across all the ho-

tels in a chain. What these hotels lacked

in exotica, they made up for in breadth

of high-end services.

Since Andre had taken the helm at

Lilypad 18 months ago, the company

had added two hotels to its stable –

undertaking a widely publicized refur-

bishment of the Bayside Mansion, in

Oakland, California, and inking a deal

to run Hotel Afzal, a newer property in

Riyadh, Saudi Arabia. Now Andre was

fl ying to Brazil for a follow-up meeting

with one of the owners of the inde-

pendent La Plaza, which the CEO and

members of his senior team viewed as

a potential candidate for a manage-

ment contract.

Lilypad’s board of directors ex-

pected such growth. That point had

been made abundantly clear to Andre,

a former acquisitions and asset man-

ager from a large U.S. hotel investment

company, during the interview process

and in subsequent conversations with

individual board members and other

senior leaders. So it had troubled An-

dre deeply when his VP of sales and

marketing told those assembled at an

off-site devoted expressly to long-term

strategy that, despite recent efforts to

pull more properties into the fold, Lily-

pad was leaving huge opportunities on

the table. Surveys conducted by the

marketing team suggested that custom-

ers loyal to one of Lilypad’s individually

branded hotels rarely visited other prop-

erties in the group; most people didn’t

even realize their favorite hotels were

part of a collection. Even some travel

agents polled said they weren’t aware

the Lilypad properties were affi liated

in any way. In the past year, only about

5% of all visitors to a Lilypad hotel or

resort had stayed at more than one of

the company’s other properties. Mean-

while, corporate-branded hotels like

the Four Seasons and the Ritz-Carlton

enjoyed annual cross-property usage

rates of 10% to 15%. “Our current strat-

egy is really limiting our ability to do

two things – serve our existing custom-

ers better and compete effectively with

the rest of the fi eld to attract new visi-

tors,” Abby had told the off-site crowd.

Her proposed remedy was relatively

straightforward: Invest a significant

amount of marketing dollars and other

resources to increase cross-property

stays, thereby boosting the lifetime

value of existing customers and reach-

ing out to new ones. And put the Lily-

pad name front and center on high-

profi le amenities and in high-traffi c

areas at every property within the col-

lection. As it was, the corporate logo

appeared discreetly on lower-profi le

items such as stationery and clothes

hangers. Hotel phone greetings never

mentioned Lilypad, only the individual

property names. The goal, Abby had

told Andre and the others, was to cre-

ate Lilypad junkies – business and lei-

sure travelers who would seek out the

company’s hotels exclusively and who

would pride themselves on collecting

experiences (and maybe even some

premium-priced souvenirs) from all of

Lilypad’s luxury properties.

There was no denying the obvious

scale effi ciencies Lilypad could create

by putting all its properties under one

brand, Andre thought. Items could be

bulk ordered for all hotels; advertising

campaigns could be piggybacked. On

the fl ip side, there would be contracts

to rework and entrepreneurial-minded

general managers to appease at each

hotel. Getting them to give up even a

modicum of control would require an

extraordinary amount of legwork and

paperwork.

The executive glanced at the clock

in the lower right corner of his com-

puter screen and did a quick time con-

version – only seven more hours before

his layover in São Paulo. The Lilypad

board meeting was in two weeks, and

Andre felt that might be an appropriate

deadline for coming up with a compel-

ling argument for change – or against

it. He was slated to go over details of

the plan with Abby and Lilypad CFO

Sam Boyle after this sojourn came to an

end. Andre rattled the bottle of tablets

again, this time consciously considering

Chekitan S. Dev ([email protected])

is an associate professor of marketing and

brand management at Cornell University’s

School of Hotel Administration in Ithaca,

New York.

Each Lilypad hotel came with its own set of intangibles and its own sense of place.

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them, but decided it was too late for the

melatonin to have the desired effect.

There was plenty of work to do anyway,

he thought, double-clicking on another

document.

Serene Beauty – and Sourdough Bagels?It was cloudy and unseasonably cool

in Rio, and the colorful parades and

raucous parties of Carnival were two

weeks past, but Curtis Frye, Lilypad’s

vice president for South America, still

felt like celebrating. He and Andre were

waiting in the entryway of the boutique

hotel La Plaza, listening to the mellow

Bebel Gilberto tracks being piped into

the front room, checking their messages

on their BlackBerrys while keeping an

eye out for their driver. They had just

fi nished what Curtis considered some

very promising discussions with Monty

Ohba, La Plaza’s principal owner. “We’ll

see what his partners say, but I think

we’re down for a deal,” Curtis said far

out of earshot of the front-desk staff.

When it opened three years ago, La

Plaza had generated a fair amount of

fawning in the local press precisely be-

cause a stay there was so different from

a visit to any one of the mammoth

high-rise hotels that lined the Brazilian

beaches. Compared with those “chichi

towers of glass,” as Monty had called

the competition, La Plaza was more

guest house than hotel. The building

wasn’t directly on the beach; it was sev-

eral quiet miles from the white sand

and the bass-booming discotheques

that never seemed to close. Because of

the property’s quirky layout, the rooms

varied in size. Several had pedestrian

showers instead of Jacuzzi baths, and

none had minibars or cable TV. The

small but dedicated staff (all born and

raised in Rio) never wavered in provid-

ing guests with personalized care and

information – “authentic regional hos-

pitality,” Monty had called it.

Despite all the buzz early on, how-

ever, La Plaza had recently been unable

to gain traction among international

travelers. “A couple of years ago, we’d

have been considered a gold sponsor

for some of the smaller Carnival events.

This year, we were lucky just to fi nd

out about the planning meetings,” the

owner had said. In fact, revelers’ visits

to the hotel were down from previous

years, and Monty had even considered

lowering the premium rates – anath-

ema in the luxury segment.

“Sure, we can always benefi t from

operational improvements,” Monty

had admitted. There’d been some staff

turnover in the past few months, and

the small hotel was struggling with its

online initiatives. “But you both know

image is everything, and that’s where

we feel we need to put our focus. Get

the word out again to leisure and busi-

ness travelers.”

Andre and Curtis revisited this point

over and over again during their ride

from La Plaza’s lush hillside setting

to Lilypad’s outpost downtown. “You

know what I was thinking about, right?”

Andre asked as the car wound its way

toward the many churches, monu-

ments, and museums in Rio’s center.

Curtis did indeed; he had attended the

long-term strategy session via video-

conference and generally agreed with

Abby’s proposal. “La Plaza drafts off our

brand, and that becomes a big piece of

our value-add,” Andre said.

Curtis nodded. “No question La

Plaza could attract more leisure travel-

ers with our help. This place is tailor-

made for the ecominded and adventur-

ous,” he said. Tougher to predict was

whether the business crowd would

fl ock to La Plaza even with the extra

push from Lilypad. “Not to paint with

too broad a brush,” Curtis said, “but the

typical manager fl ying here to meet

with clients at Petrobras or Telemar is

looking for a convenient location, Wi-Fi,

a workout area, CNN or some equiv-

alent – and maybe even some good

sourdough bagels with cream cheese.”

Andre chuckled. That morning, he’d

told Curtis he was jonesing for a chewy

bagel instead of the crumbly rolls and

strong Brazilian coffee served at the ho-

tel where he was staying. “Actually, the

dark roast wasn’t so bad once I added

a lot of milk,” the CEO retorted, as the

cab slowly pulled up to the front of

the offi ce building.

My Dinner with Betsey“The idea seems solid,” Sam acknowl-

edged, sipping his sake, “but what’s it

going to take to make this real?” The

CFO of Lilypad had joined Andre and

Betsey, Lilypad’s founder, for a weekend

dinner at Ozumo, a Japanese restaurant

just a few blocks from Lilypad’s offi ces

in San Francisco’s fi nancial district. An-

dre had been back from Brazil only

a few days, and Sam had barely had a

chance recently to lift his head out of

the quarterly reports. But both had

made it a priority to catch up with a

much-respected friend and former col-

league while indulging in some robata-

yaki plates. The conversation among the

three was easy and freewheeling, rang-

ing from the philanthropic work Betsey

was doing to how Andre’s daughters

were faring in college and the working

world, to whether Sam was really going

to buy that Harley-Davidson despite his

wife’s strong admonitions. Eventually

they got around to shop talk, as they al-

ways did.

To keep Betsey in the loop, Sam re-

capped Lilypad’s latest stats: more than

1,500 rooms and 115,000 unique guest

visits annually across its collection of

properties. Per room, the company was

bringing in an average of $750 a day,

and retention numbers had been fairly

stable over the past four years. There

were two primary sources of growth

for Lilypad and companies like it. They

could sign up new properties, increas-

ing the total number of units for sale,

or they could improve the occupancy

and cross-sell rates of existing units,

increasing the company’s revenue per

room. Andre had been having some

success with the former approach. And

now Abby and her team were pointing

out missed opportunities in the latter

category – which, by the way, called

for much more of a fi nancial outlay,

Sam said.

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To bolster the corporate brand, the

CFO continued, Lilypad would need

to revise phone greetings at HQ and at

the individual properties, along with

the taglines and logos on all marketing

copy, signage, websites, linens, towels,

and so on. Senior management would

have to assess all the properties to de-

termine whether they’d need any reno-

vations or extra staffi ng to deliver ser-

vices consistent with the Lilypad brand.

Eventually, the company would need to

revamp its training programs to teach

managers and employees “The Lilypad

Way.” It might even need further orga-

nizational restructuring in order to link

each of the sites more closely to HQ,

Sam said. “It’s a little daunting, but cer-

tainly doable.”

“Much different from the way we set

this thing up,” Betsey said with a smirk.

The company founder, who had always

reveled in playing devil’s advocate at

executive committee and board meet-

ings (sometimes driving her partners a

little batty in the process), posed what

she considered a crucial question to the

gentlemen passing plates to her left

and right. “We all have a general sense

of the kinds of properties Lilypad goes

after. But how do you describe those

intangibles to the individual hotel man-

agers? I mean, they’re the ones who are

going to have to live with and execute

the changes.”

“The brand promise is the same as

it’s always been, Betsey – one-of-a-kind

travel experiences in beautiful and

unique locations,” Andre said. “The

hotels shouldn’t need to change what

they’re doing in many signifi cant ways.

We’d just be helping our customers

connect the dots. You know – ‘If you

love the Maritime, you should see what

we’re doing in Dallas and London and

the Virgin Islands.’”

“No matter how big or small, you’re

still talking about enforcing consistency

across all the hotels in the collection,”

Betsey said. “And that’s in direct opposi-

tion to the brand promise, isn’t it?” Pri-

vately, the company founder wondered

whether a strong corporate brand

would be worth all that much if cus-

tomers balked at what they perceived

to be a huge change: Those people who

have a deep bond with the Maritime,

for instance, and feel as if they’re in on

the most exclusive secret in the world

might resent (and reject) a new sign

that says, “Lilypad Maritime.”

“Mind you, I’m not necessarily dis-

agreeing with your sales and market-

ing VP,” Betsey went on. She noted that

there were opportunities to capture

more value from that 20% of the mar-

ket that generates 80% of the revenues,

but she also reminded them of obvious

questions of control and quality. “Take

the general manager at the Tarryton.

Bit of a control freak, that one. I just

can’t see him wanting his fortunes tied

so closely to what the other properties

are doing. He’s got his own thing going

on, and he’s been working his own plan

for so long now – with much success, I

might add.”

Under a corporate brand the general

managers would still be able to promote

their properties’ distinctive images as

they saw fi t, albeit with a few caveats,

Sam said. In fact, some standardization

across properties might free them up to

concentrate on the creative stuff they

loved – brainstorming new menu items

or guest events. They could worry less

about staffi ng assignments, purchase

orders, those kinds of things, the CFO

reasoned.

“You tell that to Ivan Hughes,” Betsey

said with a laugh, imagining such a con-

versation with the Tarryton manager.

“And I’ll plan on being out of town that

weekend.”

• • •

Wednesday was raw and rainy, and the

Lilypad board was slated to meet in

about 15 minutes in the Counting Room

at the Maritime. Andre rushed into the

hotel, glad to trade the wind outside

for the warmth of the grand fl agstone

fi replace in the lobby. As he shook the

raindrops from his umbrella and over-

coat, the CEO mentally ticked off the

loose ends he’d managed to tie up that

afternoon: He’d checked in with Curtis

in South America – the people from La

Plaza had yet to make a decision. He’d

sent Betsey the investment article

he’d told her about during dinner.

And he’d confi rmed with his assistant,

Becky, that all the information for the

board meeting had already been dis-

tributed to the independent directors.

After taking a couple of moments

to settle in and exchange pleasantries

with the Maritime staff, Andre started

walking toward the far end of the

lobby. That’s where several of his col-

leagues were indulging in the coffee,

tea, and sweets the hotel had set up for

the board members. He’d taken only

a few steps when he noticed the latest

Travel sitting on a coffee table – the is-

sue featuring the magazine’s annual list

of the best hotels in the world. Like a

hummingbird drawn to sugar, Andre

instinctively picked up the magazine

to skim the list. He certainly wasn’t sur-

prised to see the Bayside, the Maritime,

and several others near the top – all

of them Lilypad properties but none of

them identifi ed as such. By compari-

son, rivals such as the Peninsula and

the Oberoi hotels had fewer proper-

ties mentioned, but the association

with the parent company was crystal

clear. “We’re the best little hotel man-

agement company no one’s ever heard

of,” he muttered. Instead of putting the

magazine back on the table, the CEO

tucked it into his briefcase and headed

for the pastries.

Should Lilypad’s hotels be marketed under the corporate brand or their own brands? Four commentators offer expert advice.

There was no denying the obvious scale effi ciencies Lilypad could create by putting all its properties under one brand.

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HBR Case Commentary | Should Lilypad’s Hotels Be Marketed Under the Corporate Brand or Their Own Brands?

IF LILYPAD’S objectives are to stay viable and create real value for the long term, it

has to pursue the global branding strategy Abigail Ross is proposing and build up the corporate brand. The two biggest assets a hotel management company has are its con-tracts and its name. With a strong corporate brand, Lilypad will be more than just a collec-tion of luxury experiences. The name can lend greater value to the company’s existing and potential peripheral businesses – for instance, Lilypad-branded cruises or condos. And the company can be more effi cient about cross-promoting the hotels in its collection, offering personalized services to customers, and buy-ing supplies in bulk. You can’t realize all those effi ciencies with a no-name company.

CEO Andre Cleary also needs to remem-ber that there are thousands of independent hotels worldwide, which means the mar-ket for future contracts – that is, for future

growth – is considerable. Many of the prop-erty owners may not want to forfeit their well-established names to a management compa-ny’s brand: If things don’t work out, they’ll have to start again from scratch. However, being associated with a powerful corporate brand will drive up the value of their proper-ties. It’s a win-win for the property owners and the managers.

From under the corporate umbrella, the in-dividual properties would also have more suc-cess attracting global travelers. If I’m taking my fi rst trip to China, I’ll want to explore a new culture, but I’ll also want to be comfortable with my accommodations in such a different environment. When I see a listing online for a place like La Plaza, which I’ve never heard of, I’m not going to trust it – even if a travel agent goes out of his way to sell me on the distinc-tive features and location. By contrast, when

I see a listing for a Peninsula- or an Oberoi-branded hotel, that’s what I’ll go for. Reliability is a critical competitive advantage in the hotel industry.

The CEO needs to listen to his customers, though. Market research will give him a better understanding of his guests, their switching costs, and present market conditions. I went through just such an exercise four years ago: Based on the people I knew, my deep under-standing of customers, growth in the luxury sector, and the fi nancial and other resources I had, I knew I could build two very strong hotel brands within a relatively short period of time (say, eight to 10 years). Solís and Capella are both focused on high-end travelers, but each makes a different promise. Solís pledges to provide high-quality services to groups. Ca-pella is all about the individual; personal needs (being picked up at the airport, for example, or having special meals prepared) are met early

and often. In managing these brands, it has never occurred to me that the individual prop-erties affi liated with Solís and Capella can’t have both a sense of place and a sense of reliability. In the same way, Lilypad can con-tinue to make location-specifi c promises, but by adopting the new branding strategy, it can also emphasize consistency across the collec-tion – good water pressure, a hook beside the shower, an outlet near the ironing board.

Finally, although Andre does need to get the property owners and general managers to buy into any strategy change, he can take that only so far: Let the GMs have some input. Keep them in the loop. But if Ivan Hughes doesn’t like the new strategy, he has to leave. Strong brands have strong processes – ones that can supersede the effects of any one general manager. The CEO cannot live by the whims of his GMs.

Andre needs to get the property owners and general managers to buy into any strategy change, but he can take that only so far. The CEO cannot live by the whims of his GMs.

Horst Schulze is the CEO and president of the West Paces Hotel Group in Atlanta (which comprises the Capella and Solís luxury brands). He was formerly the president and COO of Ritz-Carlton.

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THE BEST brands forge an emotional con-nection, capturing share of heart as well

as share of mind. People will seek out and pay a premium price for “name” products or services, whether we’re talking about cars, coffee, handbags, or hotel accommodations. That’s because top brands impart intangible values that make customers feel good.

Many of Lilypad’s properties have success-fully created a strong set of enticing, luxurious intangibles that resonate with their custom-ers. Several already rank among the top hotels in the world. So the real question for Andre is whether the Lilypad name has more or less equity than the names of the individual hotels. Based on the rich information given about the Maritime, La Plaza, and other properties – and the limited description of the Lilypad brand – I think a corporate-umbrella strategy could ac-tually stunt rather than increase the compa-ny’s profi t and revenue growth.

Moreover, while elements of the Lilypad brand discreetly appear throughout the prop-erties, the company would need to undertake a large-scale, costly initiative to put its name front and center. Ultimately, the fi nancial risks may outweigh the potential rewards. As Lily-pad founder Betsey Hale points out, there will be critical questions of control, consistency, and quality, because the selling points and amenities of the hotels are intentionally quite different.

Similar struggles play themselves out every day in the retail industry. Consider the merger of Macy’s (formerly Federated Department Stores) and May Company. In their effort to integrate the two department store groups and develop a national Macy’s brand, Macy’s executives underestimated the loyalty of May customers. When Macy’s cut back on the promotional offers that May shoppers had come to anticipate, love, and rely on, many consumers stopped shopping at the new Macy’s stores. Efforts to redirect store-specifi c promotional dollars to a national cor-

porate marketing campaign alienated former May customers to the point where Macy’s experienced four consecutive months of fall-ing sales last spring. The mother brand had a negative halo effect.

Estée Lauder, a former employer of mine, provides another example. It owns a portfolio of cosmetics brands but allows each to stand on its own. The aspirational positioning of the Estée Lauder brand is quite distinct from the ir-reverent individuality of MAC or the clean sim-plicity of Clinique. A cobranding effort would confuse and potentially turn off customers.

At Liz Claiborne, we face similar brand-ing issues and decisions. Juicy Couture and Lucky Brand Jeans both hail from Los Ange-les, but they have little else in common. One is sexy, girly, L.A. chic. The other is authentic, cool, and rooted in rock and roll. Both ben-efi t from the resources that being owned by a large organization can provide, but neither is marketed under the Liz Claiborne label. There is no advantage; in fact, it would be a mistake, because the association with Liz Claiborne, a classic brand, would hurt these brands’ con-temporary image.

We recognize the value of maintaining the distinct DNA, customer connections, buzz, and lifestyle positioning of our brands. But we are also able to grow and support them through back-end effi ciencies in sourcing, dis-tribution, and shared administrative services. Lilypad would be best served by a similar ap-proach – mining the effi ciencies in purchasing, real estate, IT, administration, and so on to improve its fi nancial position while supporting and organically growing the iconic properties it currently owns.

A strong brand tells a story. Adding “Lily-pad” to the names of the individual hotels does nothing to enhance their intrinsic attri-butes. Instead, the company should market its exclusive hotels more aggressively to travel agents and selectively acquire new properties to propel further growth.

Ultimately, the fi nancial risks of putting the Lilypad name front and center may outweigh the potential rewards.

Jill Granoff is the execu-tive vice president of direct brands at New York–based Liz Claiborne Incorporated. She oversees the company’s Lucky Brand Jeans, Juicy Couture, and Kate Spade brands as well as the corporation’s e-commerce and outlet businesses.

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HBR Case Commentary | Should Lilypad’s Hotels Be Marketed Under the Corporate Brand or Their Own Brands?

LILYPAD HOTELS and Resorts could cer-tainly create some connections among its

brands; the business rationale for doing so is evident. However, Andre needs to proceed with caution: It’s critical that any linkages don’t compromise the value of the individual offerings. A plan to emphasize the corporate brand over the property brands might very well backfi re.

The implicit promise from each property is that no other hotel in the area will offer guests the same sort of culturally grounded travel experience. But how credible can that one-of-a-kind claim be if La Plaza’s “handwoven” bathrobes are made in China and stamped with the Lilypad logo? Once you start making branding choices that don’t ring true or that otherwise detract from the customer experi-ence, you’ve gone too far.

Lilypad’s brands are quite distinct in cus-tomers’ minds – that’s their greatest strength. So instead of making signifi cant and observ-able changes in the rooms themselves, Lily-pad’s management team should emphasize changes behind the scenes to help boost the company’s cross-sell numbers. The soft en-dorsements Lilypad is already doing (putting its name on coat hangers, for instance) may still infl uence customers’ behavior over time. But the company should also make better use

of other resources – specifi cally, the internet and various players in the travel industry. By linking the individual properties’ websites to the corporate one, for instance, Lilypad would be able to give customers more information about the hotels. It might even engender a community of “brand fans.” And by forg-ing stronger relationships with travel agents and the trade press, Lilypad would be able to tell the corporate story more comprehen-sively than it has in the past.

What’s clear, though, is that Andre and his team haven’t found the right balance

between the company’s two approaches to brand management. Lilypad has been es-pousing a strong bottom-up approach: Man-agers at individual properties have used their own marketing methods. This seems to be working – Lilypad properties are on a best-of list in a travel magazine, so someone is doing something right. Now Lilypad’s VP of sales and marketing is nudging the CEO toward a top-down approach in which all brand prom-ises fl ow from corporate. But this is likely to fail without a clear corporate brand strategy, which the company sorely lacks.

Andre will need to position the Lilypad name broadly enough to encompass all the company’s diverse properties. Obviously, he should start with the current brand promise and key in on the fact that Lilypad is not trying to “out-luxe” its rivals. Rather, it is offering distinctive cultural experiences with decid-edly local points of view. True, each property will do this differently – but each must meet overall expectations that customers will get something that’s one of a kind.

Lilypad must also understand its target market better. Only certain types of business travelers will want and need the same things as typical leisure travelers. Andre could take a closer look at competitors’ branding strate-gies – although in many cases it would be an

apples-to-oranges comparison. A company like Abercrombie & Kent emphasizes unique, high-end travel experiences, too, but also touts “expertise” as part of its brand, offering its hotel guests expert-led tours of the Egyp-tian pyramids or the chance to play a game of polo with a professional.

If Andre and his colleagues want to empha-size the corporate brand, they need to be clear about what it represents. They also need to remember that being part of a large corporate structure shouldn’t require Lilypad’s already successful properties to make any sacrifi ces.

Andre should start with the current brand promise and key in on the fact that Lilypad is not trying to “out-luxe” its rivals.

Kevin Lane Keller ([email protected]) is the E.B. Osborn Professor of Marketing at Dartmouth College’s Tuck School of Business in Hanover, New Hampshire. He has helped companies such as American Express, Ford, Miller Brew-ing, and Procter & Gamble analyze and build their brand architectures.

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58 Harvard Business Review | February 2008 | hbr.org

HBR Case Commentary | Should Lilypad’s Hotels Be Marketed Under the Corporate Brand or Their Own Brands?

A FORMER CEO of British Airways once told me that when he fi rst joined the air-

line, he thought about the brand once a year. By the time his tenure was over, fi ve years later, he thought about it once a day. That’s twenty-fi rst-century brand management in a nutshell. At most companies, the brand is an immensely valuable asset, but often CEOs have had little formal training in this area. So when someone from sales and marketing drops by and says, “I think we need to do things differently,” the chief executive is put in a diffi cult position.

At Lilypad, Andre is becoming embroiled in the subjective and emotional topic of com-pany names and identities. He and his col-leagues aren’t objectively considering the brand as a powerful asset, there to leverage long-term business strategy. They are looking at brand management in a surface way, which frankly makes them not that different from a lot of organizations – particularly midsize busi-nesses seeking McDonald’s or Disney levels of name, service, and quality recognition. In-

stead of approaching this branding matter as a name-change question, Andre and his col-leagues need to systematically examine the corporate brand through a couple of important lenses: customers and culture.

Customers. It’s evident from the unfo-cused way Andre and others talk about the Lilypad brand that they don’t have a clear sense of the customer. At one point, the indi-vidual properties are characterized as feeding people’s desires and aspirations, which casts the individual brands in sentimental, emotional terms. But by the end of the case study, Andre is thinking about Lilypad as the best little se-cret in hotel management, which frames the corporate brand in terms of execution and op-erations. Great brands are single-minded about what makes them different from others. To

get more clarity about whether the company should be, say, niche and focused, it’s critical to ask, “Who are Lilypad’s current customers, and what will future customers look like?”

Market research can help. Interbrand cre-ated a value-based modeling tool for a global hotel company that was trying to answer brand questions similar to Lilypad’s. The tool uncovered how value was generated at dif-ferent properties by determining the optimal relationship between customer-satisfaction scores and customer-experience attributes. The top team was then able to make a strong business case for new branding invest-ments – which have resulted in signifi cant increases in sales and cross-property usage.

Ultimately, how Lilypad positions itself vis-à-vis its customers will have a huge bearing on its future as a brand. Take the Virgin brand: It’s not exclusively about airlines or beverages or broadband connections. The brand attribute shared by these disparate business lines is Virgin’s commitment to serving customers.

Culture. At Lilypad, each property man-ager is a warlord in charge of his own fi efdom. That’s one of the fi rst things Andre’s going to have to change if he wants to build a global brand – and I think he recognizes how diffi cult that will be. It will require the orchestration of everyone who in some way touches the Lilypad customer – people in billing, design, sales and acquisitions, and so on. Andre will also need to get buy-in from the senior leagu-ers across these different constituencies. Otherwise he won’t just have a not-invented-here problem; he’ll have a not-executed-here problem.

If Lilypad’s senior managers increase the role of the corporate brand, they will also cre-ate certain expectations among customers. And if the business isn’t aligned to deliver on those expectations, the result will be, at best, a wasted name-change investment – and at worst, deeply unhappy customers.

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Andre and his colleagues aren’t objectively considering the brand as a powerful asset, there to leverage long-term business strategy.

Jez Frampton ([email protected]) is the global CEO of Interbrand, a consul-tancy based in New York.

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